Biden invokes Defense Production Act to counter dearth of baby formula

President Biden is under pressure on a number of fronts right now, including getting more done and showing better results that people can feel in the near future.That's particularly true when it comes to the shortage of baby formula around the country. Brian Deese, the Biden administration's director of the National Economic Council, joins Geoff Bennett to discuss some of those concerns.

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  • Judy Woodruff:

    The president is being pressed on a number of fronts right now, both to do more and to show results that people can feel in the near future.

    That's particularly true when it comes to the current shortage of baby formula around the country.

    Geoff Bennett zeros in on those concerns.

  • Geoff Bennett:

    Judy, the shortage has been a serious problem for months now and has gotten worse during the spring. Store shelves are about 40 percent short of the formula they normally sell. That means prices in some places are going up for what's left. And, in some cases, we have heard of parents driving hours to find what they need or even more serious measures like watering down baby formula, which experts say is dangerous.

    The president has announced new measures to address this, but there are important questions about how effective this will be.

    Brian Deese is the Biden administration's director of the National Economic Council. And he joins me now.

    Welcome back to the "NewsHour."

  • Brian Deese, Director, National Economic Council:

    Happy to be here.

  • Geoff Bennett:

    And President Biden, as you well know, he invoked the Defense Production Act, which requires suppliers to provide baby formula ingredients to those companies that produce it before it goes to other companies.

    He's also authorized this new program called Operation Fly Formula to speed up imports. So what's the expectation for how quickly infant formula will appear back on shelves, be widely available?

  • Brian Deese:

    Well, we need to focus on a couple of things to make that happen.

    The first is to increase production. We need to produce — manufacture, to produce more formula. And, as you said, the president invoked the Defense Production Act to make sure that the manufacturers of formula in the United States have all of the supplies and the components that they need to get to 100 percent production as quickly as possible. So that's happening right now.

    The second is, we need to get more formula that's outside the United States that we know is safe into the United States. And that's what the Operation Fly Formula is about, the Defense Department, directed by the president, to use commercial cargo to bring that product into the United States.

    These steps are happening in real time. We're in contact with both the manufacturers and the retailers overnight, through the day, and we will be into the weekend. And we anticipate that these steps will help to get that product produced and moving quicker than it would otherwise move.

  • Geoff Bennett:

    You have said that the administration was aware of this infant formula shortage back in February. So, why then did the government let it get to this point? Why not invoke the DPA much earlier to ease this supply situation?

  • Brian Deese:

    The genesis of this challenge was that, in mid-February, on February 17, the FDA shut a facility, but — from Abbott manufacturing in Sturgis, Michigan, because of a concern that the formula that was being produced was unsafe. That was a safety judgment that has to be made.

    And, of course, we're dealing with infant formula, so we have to put safety at the front here. But, immediately after that happened, the president — the administration began working with manufacturers and retailers to try to make sure that production was increasing.

    And, in fact, the reason why we are where we are today, where production is getting to 100 percent, is because of the work that's been happening over the last several weeks.

    The reason for the Defense Production Act now is, we want to make sure that manufacturers can maintain and stay at that 100 percent capacity. We don't want any manufacturer, now that they have ramped up, to be in a place where, for example, they can't get the bottles that they need to fulfill an order, or they can't get an input that they need to fill an order.

    Having the flexibility of the Defense Production Act now in place will ensure that they can stay at this high rate of production going forward.

  • Geoff Bennett:

    It strikes me that the government is in many ways relying on Abbott and the FDA to get us out of this mess, when you could argue that it was Abbott and the FDA that created this crisis in the first place, Abbott for reportedly running that lab that was — didn't have sanitary conditions, and then the FDA, which apparently didn't address a whistle-blower complaint,appropriately that it received back in October.

    So, how is it that the FDA and Abbott can be held to account and can be relied upon to now fix this problem?

  • Brian Deese:

    Well, the FDA is focused on safety. And the reason why it took the actions that it did in February to shut that Abbott facility was based on scientific and safety judgments.

    But now we need Abbott to move as quickly as possible to get that facility up and running. The FDA has made very clear exactly the steps that need to be taken, so that it can run safely. Abbott is committed to those steps and is moving to put them in place.

    But they need to do so without any delay. And we need other manufacturers to ramp up their production as well. And once we get through this immediate crisis, we do need to ask some hard questions about a market, a private sector market that is dominated by three large producers that supply 90 percent of the infant formula in this country.

    We need to think about how we can bring more competition into this market, more new entrants into this market, so that the American consumer is not reliant on any one private company as much as we are today.

  • Geoff Bennett:

    I want to draw you out on that because, as you rightly point out, Abbott, they create 40 percent of the U.S. infant formula that is available on shelves. Millions of American families are reliant on baby formula.

    And there are just a handful of companies that produce it. So when you say there will be there will be time for those questions, I mean, what does that look like? How concerned is the administration about this sort of market consolidation? And what are you prepared to do about it?

  • Brian Deese:

    Well, it is a concern. And it's a concern in infant formula and more broadly.

    And the president has actually identified that the lack of competition and consolidation in a number of industries has actually reduced the benefits for consumers, driven up prices, but also created this type of risk that the supply chain vulnerability can actually leave Americans exposed.

    We have seen this throughout the pandemic, that our economy is too reliant on these brittle supply chains. And a lot of that is due to challenges about consolidation in different markets. So, we have ramped up antitrust scrutiny and merger scrutiny. That's one element of this.

    The other is, though, encouraging more nonincumbents, more new businesses to enter into a market like this, so that consumers have more choice and more options. Obviously, when it comes to formula, we need to make sure that that's done safely, and that any entrant, anything that makes it to the shelves is safe for consumers.

    But we need to encourage more competition across the economy generally and in this market as well.

  • Geoff Bennett:

    Brian Deese is the director the National Economic Council.

    Brian, thanks again for your time.

  • Brian Deese:

    Thank you.

  • Judy Woodruff:

    Thanks, Geoff.

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